Summer is here and the stock market may be the furthest thing from your mind right now. The beach is calling, the kids are home from school, and maybe you're traveling for this year's vacation.
But maybe you should take one last look at Wall Street before you take the summer off. After all, there are a ton of fantastic investment opportunities out there after a few months of swooning stock prices.
Here are five stocks Fool.com contributors identified as good buys right now.
Think snow
Dan Caplinger (Vail Resorts): The beginning of summer might not seem like the best time to think about investing in a ski resort operator, but Vail Resorts (MTN 1.04%) is giving would-be shareholders an opportunity that makes it look like Christmas in July. The company has an impressive portfolio of 40 ski properties across the U.S., Canada, and Australia, having made serial acquisitions to boost its exposure to key areas like the Northeast.
As you'd expect, Vail gets most of its revenue from sales of lift tickets, along with the accompanying need for equipment rentals, ski and snowboard lessons, dining facilities, and on-premises retail operations. In her previous role as chief marketing officer, newly appointed CEO Kirsten Lynch has been instrumental in bolstering sales of season passes, with the vaunted Epic Pass becoming ever more valuable as Vail has made acquisitions to extend the range of resorts that pass holders can visit. Season pass sales cushion the blow from adverse weather, making the business a more reliable generator of revenue and profit.
Vail's stock performed well in 2021 as investors anticipated a recovery when snow-lovers rushed back to the slopes. Still, worries about an economic slowdown and lingering pandemic-related impacts on travel have dealt a 40% hit to the share price since November. That seems like an overreaction. Moreover, with a dividend yield approaching 3.5%, the ski resort operator's stock offers income as well as growth potential. Vail Resorts could well be a black diamond in the rough for investors.
Use the market's overblown retail fears to your advantage
Jason Hall (Simon Property Group): Take a quick glance at the stock chart for North America's largest mall owner, and I wouldn't fault you for seeing a business in trouble. Malls have been losing retail relevance for years, and the American consumer is getting increasingly squeezed by inflation. Add in the Fed's moves to raise interest rates to battle said inflation, and a potential recession is on the table.
This is the result:
But I think the pendulum has swung way too far in the other direction. Simon Property Group's (SPG 0.96%) properties aren't your average, low-traffic regional mall. It owns some of the best class-A malls in the markets it serves, and has a thriving, growing premium outlets business. It also has a very strong balance sheet with $8.2 billion in cash and liquidity it can access.
The board and management are demonstrating the health of this business with their actions. For example, the dividend increased by 20% in May, after raising it in each of the two prior quarters. It's also far safer than the 6.8% yield might make it seem: The $6.80 in annualized dividends works out to about 58% of the $11.68 in comparable funds from operations (FFO) per share management expects Simon to earn in 2022.
While the market sees a mall owner and fears the worst, I see opportunity. A yield near 7%, a growing (and secure) payout, and a valuation below nine times 2022 comparable FFO make Simon a bargain today.
Here's a fantastic growth stock trading at five-year lows
Anders Bylund (Netflix): I can't promise that Netflix (NFLX 4.17%) will blow the market's expectations away in July 19's second-quarter report. However, the digital media streamer's stock has stabilized at a bargain-bin price, even though the prospects for long-term growth are as clear as ever. This is a tremendous buying opportunity, and you'll be kicking yourself for missing it if you stay on the sidelines in July.
Last November, the stock started trending downward amid macroeconomic worries and an ever-growing bundle of direct competitors. The drop accelerated in January and April, as Netflix lost a few thousand subscribers and issued subscriber guidance below Wall Street's expectations. The stock is trading near five-year lows due to the subscriber-growth slowdown.
At the same time, Netflix is shifting its business focus away from maximum subscriber growth at any price and toward sustainable profits. Top-line sales have nearly tripled in five years while earnings soared 780% higher. Meanwhile, the stock is back to prices last seen in the fall of 2017:
And don't forget that the business is evolving before our eyes. Netflix will soon add an ad-supported service plan to win over the most price-sensitive entertainment consumers. In addition, the portfolio of Netflix-owned video games is growing by leaps and bounds and may become a revenue-generating business over the next couple of years. That's just the 10-second elevator pitch for what's happening in Netflix's research and development department. The company also has a long history of springing positive surprises on an unsuspecting world.
If you're not buying Netflix stock hand over fist today, I don't know what the company can ever do to win you over. This is my top stock to buy today, and it's not even a close call.
A long-term play in e-commerce and cloud computing
Chris Neiger (Amazon): Amazon (AMZN 1.30%) really doesn't need an introduction at this point, but investors should know that the company's e-commerce business is its biggest revenue category, while its cloud computing segment, Amazon Web Services (AWS), is where its profits are made.
The e-commerce segment is still growing, with sales in its largest region, North America, rising 7.5% in the most recent quarter to $69.2 billion. Some investors are understandably worried about how an economic slowdown might affect Amazon, but investors shouldn't be too concerned.
Even if consumers cut back on spending, Amazon's online store offers nearly every essential item that consumers need, which means it's unlikely they'll stop ordering from Amazon even if they have to reduce other expenses.
Investors should also take notice of Amazon's incredibly profitable AWS business. Not only did AWS revenue jump 36% to $18.4 billion in the most recent quarter, but operating income also reached $6.5 billion, an impressive increase of more than 56% year over year.
If there's an economic storm on the horizon, there's little doubt the company will be able to weather it well. Amazon proved its resilience during the pandemic as it grew its logistics capabilities and delivery capacity to keep up with soaring demand.
The massive sell-off in the broader market has helped to push Amazon's share price down 37% over the past 12 months, making the e-commerce and cloud computing giant look relatively cheap right now.
We still need a lot more warehouse space
Matt DiLallo (Prologis): Shares of global logistics real estate giant Prologis (PLD 0.72%) have tumbled nearly 30% from their peak. That's due to some chilling news from e-commerce giant Amazon, which has more warehouse space than it needs these days. Because of that, it plans to offload between 10 million and 30 million square feet of warehouse space.
However, that's a drop in the bucket compared to what's needed to support growing e-commerce sales and changing inventory management practices. According to an estimate by commercial real estate service company CBRE, the global economy needs 1.5 billion square feet of additional warehouse space by 2025.
Because of that, overall demand should remain strong. That's why Prologis fought hard to acquire fellow industrial real estate investment trust Duke Realty. It's paying $26 billion for its next biggest rival in a deal that will boost its presence in the U.S. warehouse market while growing its development pipeline. The combined company will have enough land to develop 214 million square feet of warehouse space in the future.
Duke Realty also provides Prologis with more embedded upside. The companies control nearly 1.2 billion square feet of warehouse space that's 97.5% leased. The rental rates on those contracts are 47% below the prevailing market rate. So as they expire, Prologis can capture the higher market rents. Add that to its development upside and lower share price, and Prologis looks poised to produce strong total returns in the coming years.
